Ellis says if he were an IFA he would not want to be part of a network as he does not believe there are enough advantages to compensate for the problems that can arise.
He points to the problems that members of the recently collapsed Network 300 are having.
Ellis is urging IFAs to do better due diligence when joining a network, as he says this is the only way they will be able to find out if the network will stand the test of time. He believes IFAs should stick with well established networks, and be wary of fringe operators coming into the market which may not have the resources to carry on.
His comments tally with Bankhall group sales director Shaun Godfrey who believes that many networks will fall by the wayside.
Ellis says: “If I were an IFA I would not want to be under the umbrella of a network. I do not believe people get enough out of it to compensate for the problems of being in someone else’s pocket.
“Look at Group 300. It is all very well now, saying there was bad management at the company but advisers should have looked into this before they joined the network. Advisers have to do better due diligence before joining a network.”
Godfrey says: “New networks seem to be springing up with alarming regularity, nearly 80 at the last count and others have gone out of business. Whenever this occurs, an intermediary’s income is frozen and they struggle to recoup any money owed.”